Individual Health Savings Account ( HSA )
Understanding Health Savings Account ( HSA )
Current regulations allow individuals enrolled in a high deductible health plan and that meet IRS eligibility criteria to contribute to an individual HSA . The City provides the option for employees to make pre-tax contributions through payroll deductions .
The City of Arlington has partnered with Optum Bank to provide this option for payroll direct deposits to an employee ’ s individual bank account . A bank account must be opened prior to beginning any payroll deductions . Optum will provide employees with the necessary tax forms to include with personal tax return . All medical expense receipts need to be retained by employees to document eligible distributions per IRS regulations . See the Optum Bank enrollment link on the HR portal under Documents and Forms - HSA .
HSA direct deposits become effective the first pay period after an employee has established an individual bank account and provide a Payroll Direct Deposit enrollment form to Human Resources .
What are the benefits of an HSA ?
• Claim a tax deduction for contributions you , or someone other than the City , make to your HSA bank account even if you do not itemize deductions on Form 1040 .
• The contributions remain in your bank account from year to year until you use them .
• The interest or other earnings on the assets in your bank account are tax free .
• Distributions are tax free when utilized to pay for qualified health expenses ( IRS Publication 969 ).
How much may I contribute to the HSA ?
Contributions to the HSA are limited by the amount established by IRS guidelines and typically change each calendar year . Individuals age 55 and over or who will become age 55 any time in 2020 have the option to contribute an additional $ 1,000 under the catch-up provision established by the IRS . The amount of contributions to the HSA bank account may be changed at any time throughout the year by providing a completed Health Savings Account Payroll Direct Deposit form to Human Resources .
Optum Bank HSA Maximum Annual Contributions 2020 HDHP - Employee Only Coverage $ 3,550 HDHP - Employee Plus 1 or More $ 7,100 Age 55 Catch-Up ( Age 55 by 12 / 31 / 19 ) $ 1,000
May I Contribute to an HSA and Health FSA in the same Year ?
No , however , the limited purpose FSA is available when making contributions to an HSA bank account . The limited purpose FSA account may be used to pay or reimburse specific items as outlined in Publication 969 to include dental and / or vision care expenses ONLY ! Medical expenses cannot be paid from a limited purpose FSA account .
Employees are responsible for monitoring annual contribution limits and determining eligibility for a HSA . A HSA Payroll Direct Deposit form is required to stop or change a payroll deduction mid-year .
Important HSA Enrollment Information : Employees do not qualify to contribute to a Health Savings Account in 2020 if eligible to make a claim from any FSA health reimbursement account balance . The City of Arlington has the 2½ month extension provision . When there is a balance remaining as of December 31 , 2019 in the Health FSA account , and an employee enrolls in the HDHP in 2020 and wants to open an individual HSA bank account , the first full payroll after April 1 , 2020 would be the first time a payroll direct deposit could begin .
For additional information , see the Optum Bank enrollment link on the HR portal under Documents and Forms Category : HSA .
Medicare / Social Security : If you enroll in Medicare , you may not be eligible to make HSA contributions and may be penalized if you do . Consult your personal tax advisor for more information . 15